Most-favored-nation drug pricing, from the 2020 rule to the 2026 models

On Nov. 27, 2020, the Centers for Medicare and Medicaid Services published an interim final rule¹ that would have tied what Medicare pays for 50 Part B drugs to the lowest price paid in a group of wealthy countries. The Most Favored Nation Model was set to start on Jan. 1, 2021, and run seven years. CMS's actuaries estimated it would save Medicare Part B $85.5 billion, net of premium effects.

It never took effect. Four lawsuits followed, and on Dec. 28, 2020, a federal court in Northern California issued a nationwide preliminary injunction blocking it. A year later CMS rescinded the rule², noting that "multiple courts found procedural issues" with how it had been issued.

In May 2025 the idea came back as an executive order. It has since grown into manufacturer deals, a federal discount website, a Medicaid pilot and two Medicare models built on international prices. Almost none of it is aimed at generics, and federal data help explain why. Americans already pay less than other wealthy countries for most generic drugs. What follows is each piece and its legal status as of early November 2026.

How the 2020 model was supposed to work

Under the 2020 rule, the model covered Part B drugs, the ones given in doctors' offices and hospital outpatient departments, starting with 50 single-source drugs and biologics that accounted for a high share of Part B spending. Medicare's payment would be based on the lowest price, adjusted for GDP per capita, in any other member country of the Organisation for Economic Co-operation and Development whose GDP per capita was at least 60 percent of the US figure. The international price would phase in by 25 percent a year, reaching 100 percent in the fourth year. Participation was mandatory for providers billing for those drugs.

Generics barely figured. The rule itself noted that biologics made up about 77 percent of Part B fee-for-service drug spending, leaving "little opportunity to reduce Medicare Part B spending growth through generic substitution." In Part B, a brand and its generics share one billing code and one blended payment rate, so a model built on single-source products largely passes them by. Our explainer on biosimilars and generics covers why biologics behave differently.

The 2025 executive order

Executive Order 14297, signed May 12, 2025, and published in the Federal Register³ three days later, declared that Americans "should not be forced to subsidize low-cost prescription drugs and biologics in other developed countries." It told HHS to send most-favored-nation price targets to manufacturers within 30 days. If they did not make "significant progress," the order listed fallback steps, including a rulemaking plan, a look at importation waivers under section 804 of the drug law (see our explainer on drug importation), antitrust enforcement and a review of drug exports. A separate section told HHS to help manufacturers sell directly to patients at the MFN price.

What followed came mostly as voluntary agreements. According to a White House fact sheet⁵ from Aug. 31, 2026, letters went to 17 manufacturers on July 31, 2025, the first agreement came on Sept. 30, 2025, and by the end of August 2026 the administration had MFN deals with 26 manufacturers "covering 89% of the branded drug market." The TrumpRx.gov⁴ website, launched Feb. 5, 2026, lists discounted prices for drugs from participating companies. The White House cited a Council of Economic Advisers estimate of $600 billion in savings over a decade.

Where generics show up in the deals

Generics turn up in two places. First, several of the August 2026 agreements included donations of active ingredients to the Strategic Active Pharmaceutical Ingredients Reserve, and the ingredients are long-off-patent molecules sold mainly as generics. The fact sheet⁵ lists 6.75 tons of doxycycline, 4.8 tons of amlodipine, 71.4 tons of clindamycin, 45 metric tons of metronidazole and 163 tons of levetiracetam, among others. Those donations relate to supply security rather than price, the subject of our piece on onshoring.

Second, in May 2026 TrumpRx.gov began listing nearly 600 generic drugs, linking shoppers to outside cash-price dispensers, Drug Topics reported¹¹. Those listings are cash prices offered by private sellers. They are not international benchmark prices, and for many common generics the cash price at a pharmacy is already low, as our guide to cash prices and copays explains.

Medicaid and Medicare models

CMS has turned the MFN idea into three formal models. The table summarizes them, with generic treatment as stated in each document.

GENEROUS, announced in November 2025⁶, lets state Medicaid programs buy drugs from participating manufacturers at prices aligned with other countries, using supplemental rebates. CMS said in that release that gross Medicaid drug spending topped $100 billion in 2024 and net spending, after rebates, was $60 billion. In September 2026⁷ the agency said all 50 states, the District of Columbia and Puerto Rico had applied, 40 states and Puerto Rico had signed agreements, and the model would save an estimated $64.3 billion over 10 years.

Both Medicare models work through inflation rebates, the payments manufacturers owe when prices rise faster than inflation, which the Inflation Reduction Act created (see our piece on that law). GLOBE⁸ changes how those rebates are calculated for certain Part B drugs, using an international benchmark drawn from 19 reference countries, including Canada, Japan, Germany and the United Kingdom. It is mandatory for manufacturers of model drugs and covers randomly chosen ZIP code areas with about 25 percent of traditional Medicare Part B enrollees. CMS estimated savings of $440 million over its payment period, far below the proposed rule's estimate. Because Part B inflation rebates by law exclude generic drugs, so does GLOBE.

GUARD⁹, the Part D version, was proposed in December 2025 with comments due Feb. 23, 2026. The proposal "would exclude: (1) generics and biosimilar biological products," along with low-spend drugs and drugs already subject to negotiated prices. A Federal Register search on Nov. 3, 2026, turned up no final GUARD rule.

Why generics sit mostly outside MFN

A 2024 report for HHS's Office of the Assistant Secretary for Planning and Evaluation, using 2022 data, found¹⁰ that US prices across all drugs were 278 percent of prices in 33 OECD countries. For brand-name originator drugs, US prices were 422 percent of the comparison countries, or at least 322 percent after estimated US rebates. For unbranded generics the direction reversed: "For every dollar the other countries on average pay for these drugs, in the U.S., consumers pay 67 cents."

CMS repeated those figures in the GUARD proposal⁹, noting that "pricing patterns vary between brand-name originator drugs and generic drugs in the U.S. market." GxRadar's own generic price index, built from CMS NADAC data, stood at 47.4 in October 2026, against 100 in January 2014, a fall of about 53 percent. The long slide is described in the long deflation of generic prices.

The next dates are in Medicare. GLOBE takes legal effect Nov. 30, 2026, voluntary collection of manufacturers' international net price data begins Jan. 1, 2027, and its first performance year starts April 1, 2027. More on the policy desk is at Law, patents and policy.